Centennial Building options costly; P3 conversion would need large state subsidy, presenters say

Tobin Follinweider, deputy director of operations for the Department of Personnel Administration, told the Capital Development Committee on Monday that the Centennial Building at 1313 Sherman needs extensive work and that staff have not yet recommended a course of action pending a market valuation.

The department estimated roughly $120,000,000 to renovate the eight‑story building for office use, Follinweider said, and reported about $2,000,000 in existing appropriations with a $41,000,000 request starting in fiscal 2027, leaving an estimated $77,000,000 additional need. "We don't have all the information, specifically the market valuation study," Follinweider said, adding that the department expects to return to the committee with a recommendation once that work is complete.

Tom Kuruk, the state's P3 director, summarized a public‑private partnership study that examined converting the building to about 111 to 147 housing units plus a childcare facility. Kuruk said hard conversion costs were estimated at about $91 million to $111 million and did not include expenses for parking, asbestos encapsulation or connecting the building to a new electrical loop. "It was not economical, for a private partner to take it on without significant subsidizing from the state," Kuruk said.

Kennedy, the state's real estate director, said the broader downtown market compounds the challenge: "Right now, the Downtown Denver office market stands at a historic 39% vacancy rate," he said, and the state currently carries the property's holding cost at about $1,450,000 per year. Kennedy warned that adding conversion-related costs — which staff estimated could be another $20 million to $40 million for systems and parking — would sharply increase the state's exposure.

Vice Chair (unnamed) told the committee she was "pretty thrilled" staff had stepped back from pursuing the original plan, saying that the scale of investment — $120 million — was hard to justify given other capital needs and that many state agencies have renewed private leases rather than returning to state‑owned space. "I would have a hard time getting on board with renovating it for office space or renovating it for residential when the building is in such disrepair," she said.

Committee members directed staff to deliver the market valuation and to include the Centennial Building figures when finalizing the committee's submission to the Joint Budget Committee (JVC). Chair Pogue closed the session by noting the upcoming submission deadline and adjourning the meeting.

What happens next: DPA will return to the Capital Development Committee with the market valuation and a formal recommendation; the committee will consider those findings before finalizing its JVC list.